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Tue, Oct. 15

Everything you need to know about taking care of this year's taxes

Lydia and Sean Watts laugh with Grace Barber, a Volunteer Quality Reviewer and Site Coordinator, during a free tax preparation service offered by Catholic Charities of Arizona, the Volunteer Income Tax Assistance program and the IRS. (Courier file photo)

Lydia and Sean Watts laugh with Grace Barber, a Volunteer Quality Reviewer and Site Coordinator, during a free tax preparation service offered by Catholic Charities of Arizona, the Volunteer Income Tax Assistance program and the IRS. (Courier file photo)

Tax Day pushed to April 18

This is worth noting right off the bat.

Due to an overlap of federal/state holidays, the IRS has announced some new due dates for the upcoming 2016 tax season.

For most, tax returns will not be officially due until Monday, April 18, 2016 (rather than Friday, April 15).

The reason: Emancipation Day.

Emancipation Day is an official public holiday in the District of Columbia. It usually falls on April 16, but when April 16 is a Saturday - which it is in 2016 - then Emancipation Day moves to the previous day (Friday).

Since it's a legal holiday, it gets precedence over the April 15 tax deadline and postpones tax day to the next regular business day, according to an IRS news release.

This means that anyone looking to request an extension to file may do so on or before midnight April 18.

The confusion continues for those living in Maine or Massachusetts, for April 18 is Patriots' Day in both states. This pushes tax day to April 19 for taxpayers only in those states.

Choosing return preparers carefully

The Internal Revenue Service provides a large number of tips on how to choose an individual or firm to prepare one's return.

Here are some of the most relevant:

First of all, all current preparers must have an IRS Preparer Tax Identification Number they place on one's filed tax return. It is wise to ask a preparer if they have this number.

Secondly, it is relevant to know whether the preparer has a professional credential (enrolled agent, certified public accountant or attorney), belongs to a professional organization or attends continuing education classes. None of this is required by a tax preparer, but helps tell the tax payer whether or not that tax preparer is up-to-date on current tax law.

"That's not to say that the mom and pop on the corner that don't have their credentials aren't good, but you don't know that," said IRS spokesman Bill Brunson.

The IRS has a website (http://1.usa.gov/21c5p5R) where one can key in a Zip code and find out who are the accredited preparers in the area.

It is also helpful to check a preparer's qualifications by using the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications (http://1.usa.gov/1Kv1zu9). This tool can help people find a tax return preparer with the qualifications they prefer.

A preparer's history can also be checked by asking the Better Business Bureau about them, turning to the State Board of Accountancy to look up a Certified Public Accountant, turning to the State Bar Association for attorneys, and going to IRS.gov to look up an enrolled agent.

For additional tips, go to http://1.usa.gov/1XAIgYE.

Earned Income Tax Credit

"The reason people need to know about this is because it can put money in their pocket," Brunson said.

The Earned Income Tax Credit (EITC) is a financial boost for people working hard to make ends meet, according to an IRS news release.

The amount of EITC varies based on income, filing status and family size, but if you earned $53,267 or less in 2015, you may be eligible for up to a maximum of $6,242. Even a single individual with no qualifying children can possibly get a check from Uncle Sam for as much as $503.

The average Arizonan received $2,576 of EITC last year, according to the release.

The IRS finds that about 20 to 25 percent of people who file and are eligible for the credit, fail to claim it, Brunson said.

"We're not exactly certain why that is the case," he said.

Brian Watson, IRS Special Agent and Public Information Officer, believes it mostly comes down to who's preparing the return.

"A good return preparer using an electronic program will pick it up, but if you self-prepare on paper, you could easily miss a lot of stuff," Watson said.

To see if you qualify for the credit, use the EITC Assistant on IRS.gov. To get the EITC, workers need to file a tax return and complete Schedule EIC to claim the credits, even if they aren't required to file.

Since it's a refundable tax credit, workers may get money back even if they have no tax due.

Electronic filing

The IRS highly encourages workers to electronically file their tax return.

"It's about the 99.5 percentile that is error-rate free with an electronically filed tax return," Brunson said.

There are three ways to file electronically.

One is going to IRS.gov and using IRS Free File. There are two forms of free file. There's fillable forms and traditional free file. Traditional free file requires that someone have an adjusted gross income of $62,000 or less, which Brunson said equates to about 70 percent of all Arizonans. Those making more than that must use a fillable form if they choose to go this route.

The other two ways to e-file are using commercial tax preparation software or finding an authorized e-file provider.

Electronically filing is not only fast, accurate and secure, but it also saves the federal government money due to processing costs, Brunson said.

"Which in turn saves your federal dollars," he said.

It costs the federal government $3.83 to process a tax return filed the old-fashioned way on paper.

If electronically filed, that cost is only 21 cents.

Out of the 2,910,700 taxpayers expected to file this year, 2,501,000 are estimated to do it electronically.

Missing W-2's

Most people get their W-2 forms by the end of January. Form W-2, Wage and Tax Statement, shows income and the taxes withheld from someone's pay for the year.

If that form has not been received by mid-February, the IRS recommends a series of steps.

The first is to contact the current or former employer required to supply the form and ask that they resend the information.

If that doesn't work, is it recommended the taxpayer contact the IRS by calling 800-829-1040 after Feb. 23. The IRS will send a letter to the employer on the taxpayer's behalf. When calling, it is important to have personal information available to provide.

"We primarily want to know income and taxes withheld," Brunson said. "We also want to know an address of that former or current employer so we may contact them about reissuing the statement to the taxpayer."

Scams

The IRS releases its famous "Dirty Dozen" list of tax scams every year. Most are ongoing issues.

"Probably the worst one I've ever seen that is still a major problem is this IRS impersonation tax scam," Brunson said.

This is when someone calls a citizen at random and pretends to be an IRS agent. This "IRS agent" usually demands payment for taxes owed without first having mailed a bill to the citizen. If there is push back, the impersonator usually threatens to bring in local police or other law-enforcement groups to have the citizen arrested for not paying.

The Treasury Inspector General for Tax Administration (TIGTA) reports there have so far been 136 victims of this scam in Arizona since TIGTA started tracking it in October 2013. This has amounted to $581,431 in stolen money. Nationally, there have been more than 5,000 victims who have collectively paid more than $26.5 million as a result of the scam.

"And we know that number is light," said Watson. "Because either people don't know they've been scammed or they're too embarrassed to come forward, or they've already lost it and figure what's the point."

The point, Watson said, is spreading the news so perhaps it won't happen to others who are more aware of the issue.

"The only way we're going to stop it is drying up their source," Watson said. "That means telling all of your friends who might be a little more gullible about the scam."

"Unless you have a known ongoing issue with the IRS, don't engage with the individual on the phone, just hang up," Brunson said.

To see the full list of tax scams, go to http://1.usa.gov/1QsaqiW.

Refunds

About 90 percent of refunds are issued in less than 21 days from the time of filing, according to the IRS.

The best way to check the status of a refund is online through the "Where's my Refund?" (https://www.irs.gov/refunds) tool at irs.gov or via the IRSGo phone app.

"Where's my Refund?" has a tracker that displays progress through three stages: 1) Return receive, 2) Refund approved and 3) Refund sent. Taxpayers can start tracking their refund 24 hours after the IRS has received an e-filed return or four weeks after receipt of a mailed paper return.

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